May 18 (Bloomberg) -- For most of the day, Tripoli’s
international airport was paralyzed, with planes idle on the
tarmac and ticket counters unmanned, as air traffic control and
ground staff went on strike.

While the protest lasted less then 24 hours on May 13, it
showed the challenges Libya’s central government, which took
control of the airport from militias a month earlier, faces in
imposing its authority on a nation that holds Africa’s biggest
oil reserves. Last week, former rebels demanding unpaid wages
stormed and occupied the offices of Prime Minister Abdulrahim
el-Keib, leaving at least one person dead.

With their economy stagnating and security deteriorating,
Libyans are casting ballots on May 19 in local elections in the
second-largest city, Benghazi, and a month later for a national
legislature tasked with writing a new constitution. The votes
may determine whether the nation fragments further or is able to
lure the investors it needs to rebuild after Muammar Qaddafi’s
42-year rule.

Foreign companies “want to see a government that has got
serious authority, that is able to govern, has security and
legal controls,” John Hamiliton, a Libya oil specialist at the
London-based consultancy Cross-Border Information, said in a May
14 interview. “None of these things exist now.”

Benghazi was the birthplace of the revolution that, backed
by North Atlantic Treaty Organization airstrikes, led to
Qaddafi’s ouster and death. It is also the main city in the
eastern province of Cyrenaica, which some tribal leaders
declared in March a semi-autonomous region, saying it was
ignored by the ruling National Transitional Council, like
Qaddafi’s government before it.

No Regime Change

“We got rid of Qaddafi, but not the regime,” Hana El
Gallal, who quit the 72-member NTC and is now a Benghazi civil
rights activist, said in an interview. Many people are more
concerned about the local vote so they can establish an
alternative government in the east because of fears that the NTC
will rig the national election on June 19, she said.

If the national elections “go wrong, we don’t need the
national congress,” El Gallal said. “By then we will have our
own council.”

The election in Benghazi is being organized without
consulting the NTC, repeating the act of defiance by Libya’s
third-largest city, Misrata, in February.

“Democracy should begin like this,” with local elections,
said Younis Fannush, an official with the secularist National
Forces Coalition, one of three loose blocs dominating Libyan
politics. “That’s how it worked with Misrata.”

Misrata Rebuff

Officials in Misrata announced this month they would no
longer recognize the four officials the NTC appointed to
represent the city as part of the interim national leadership.

Misratans themselves have stepped up efforts to revive the
local economy, which is based on trade and is centered on Qasr
Ahmad, the deepest and most modern container port in Libya.

With improved security provided by local militias, Italian
and Japanese staff are returning to Misrata’s steel plant,
LISCO, said Farouk Ben Hamida, who helps run his family’s
clothes-importing business.

In the rest of Libya, he said in a phone interview, “there
is too much uncertainty.”

Oil workers this month urged the interior and defense
ministries to protect them against armed groups, the state-owned
National Oil Corp. said on May 13.

“What some armed groups are carrying out in the oil and
gas sector is aimed at impeding work, spreading chaos and
instilling fear in the workers,” the Tripoli-based company said
in a statement on its website.

Oil Protests

The statement followed demonstrations that blocked the
headquarters of the Arabian Gulf Oil Co. in Benghazi to demand
better pay and more transparency over the use of Libya’s oil
revenue, leading the company to cut about 30,000 barrels of its
370,000 barrel a day output.

Libya, Africa’s third-biggest oil producer after Nigeria
and Angola, pumped 1.35 million barrels a day last month,
approaching prewar levels of 1.6 million barrels a day,
according to data compiled by Bloomberg. Companies operating in
Libya include Total SA, ConocoPhillips, Repsol YPF SA and Eni
SpA.

Attracting foreign investment will depend on beefing up
security as well as reaching consensus on addressing structural
problems, the International Monetary Fund said in an April
report. They include state control of banks and a public sector
wage bill that jumped to 19 percent of gross domestic product
this year from nine percent in 2010, it said.

Musa Al-Koni, a member of the NTC, said the ruling council
had dented public confidence by not holding its meetings in
public and by reversing a decision to fire the Cabinet on May 4.

“We made many mistakes, too many,” he said in a May 13
interview in Tripoli. “Everything has been paralyzed until
after the elections. When there is an elected assembly, it can
establish good rules.”